Balance Transfer Credit cards: way to manage debt

If you’ve unfortunately accumulated debt on a credit card and wish to move it to another credit card before you are charged a high interest, you can perform a balance transfer. Balance Transfer cards may have a lower or 0% interest rate making them a means of avoiding high repayments on your debt.

How do I do a balance transfer?

First, you apply for a new card which has a lower or 0% interest rate then proceed to transfer your balance to it from the high interest card. Effectively you’re using one card to pay off another (credit to pay off credit) all while getting a lower interest rate in the process on the debt you owe to the bank.

The issuing bank’s perspective

They will require personal as well as bank details of the account you wish to transfer from in addition to your transfer amount. The new bank may approve you for either the amount you requested or a partial amount. Clearly you’re a risk to the bank since you carry a debt. If you pay off the debt, they might approve you for a larger amount the next time you request it.

Do keep in mind that you most likely will be unable to transfer your debt between cards from the same issuer/bank. There is a timeframe within which you need to pay off the old account debt so that the balance transfer is completed.

How do I choose the correct balance transfer card?

Self reading and researching all the cards out there is the best way to proceed with anything credit related. It makes sense to get a card that least costs you over what you already owe. Here are a list of things to consider when searching for a BTC:

  • The interest rate on transferred balances: BTC specific cards tend to have low introductory rate for transfers. Ideally you want to find one that is 0%.
  • The balance transfer fee: When transferring debt, there tends to be a fee (3-5%) of the amount you plan to transfer and you ideally want a card with no balance transfer fees.
  • The length of the promotional period: A balance transfer should give you breathing room to pay down your debt, so look for one with a long 0% period. At the end of the promo period, the rate goes up by a lot — usually to the same rate the card charges for purchases, so you’ll want to have your balance paid down by then.
  • The annual fee: Most BTC cards do come without an annual fee which is ideally what you want to stick to,

What to consider when applying for a BTC?

While it is important to pay off debt or give yourself some cushion room to do so, please consider whether or not you save an amount greater than the fees involved. Additionally know your limits and make an honest judgement call, based on your financial position, if you can pay off all balances during the interest free period.Will the amount you save in interest be higher than the balance transfer fee?

My closing remarks and advice with BTC cards.
Never spend more than you can or fall in a false sense of instant gratification. After completing the transfer, plan to pay it off ASAP may that be through weekly or monthly
payments even if you have to sacrifice on comfort spends you may otherwise make.

Avoid paying off credit with credit and accruing debt. Do not keep transferring debt and not paying it off in full as future lenders will see this risky behavior and possibly blacklist you or deny applications.

If the credit card you initially accrued debt on is a no annual fee card, keep it open and do not close it. Older cards add positively to your age of accounts boosting your credit score. Additionally, higher the number of open lines of credit on your credit report, better it is for your score. But if that card has an annual fee and you no longer see positive expected value from it, close it. Closed accounts in good standing (with all balances paid in full) stay on your credit report for 10 years.

You may check out Balance transfer cards by American Express using our link below.


Click on “View all cards with a referral offer -> 0% intro APR

6 comments on “Balance Transfer Credit cards: way to manage debt

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